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SK hynix reaps 175% growth in Q3 operating profit despite price falls
With Intel acquisition, CEO vows to seek balanced business structure between DRAM and NANDBy Song Su-hyun
Published : Nov. 4, 2020 - 15:15
SK hynix, the world’s second-largest memory provider, achieved a 175 percent on-year growth in its operating profit in the third quarter of this year, despite adverse market conditions including declines in prices and the COVID-19 pandemic.
According to its earnings results announced Wednesday, the chipmaker posted 8.13 trillion won ($7.2 billion) in revenue, while obtaining 1.3 trillion won in operating profit during the period between July and September.
Revenue and operating profit jumped 18.9 percent and 175 percent from a year earlier, respectively.
However, the figures decreased by 6 percent and 33 percent each from the previous quarter, due to weakened demand for server DRAM and solid state drives and downward trends in the overall memory prices.
Amid such unfavorable market conditions, SK hynix said it proactively responded to the rising demand for mobile graphics DRAM and consumer electronics DRAM, which was the result of the protracted COVID-19 pandemic. This led to a 4 percent quarter-on-quarter growth in the chipmaker’s DRAM bit shipment, it said.
NAND Flash memory sales expanded in both mobile and SSDs for gaming consoles, the chipmaker said. The sales growth boosted NAND bit shipments by 9 percent on-quarter.
SK hynix CEO Lee Seok-hee participated in the company’s earnings conference call Wednesday to provide an extra explanation about the latest acquisition of Intel’s NAND memory and storage business.
“SK hynix acquired Intel’s NAND memory and storage business in order to swiftly secure leading SSD technology and diversify its product portfolio,” Lee said. “With this acquisition the company seeks to establish a balanced business structure between DRAM and NAND Flash.”
Last month, the Korean memory chipmaker announced a $9 billion deal with US-based chip giant Intel to acquire its NAND memory storage solution business, which would make it the world’s second-biggest NAND provider.
The chipmaker’s top executive also announced SK hynix would join the rest of SK Group in pursuing the RE100 campaign to respond to climate change by switching to 100 percent renewable energy.
“The dramatic climate change is the problem which impacts not only companies’ economic value but also the survival of human race. SK hynix noticed the severity of the current global climate change, and decided to join RE100 in order to proactively respond to this crisis,” he said. “The company aims to secure all of its power consumption generated by renewable energy by 2050.”
Compared to hard disk drives, general SSDs and low power consumption SSDs consume 50 percent and 94 percent less power, respectively, the CEO said, expressing hope that all HDDs in global data centers would be replaced by energy-saving SSDs.
“We can reduce 41 million tons of carbon dioxide emissions,” Lee said. “This will lead to approximately more than 4.2 trillion won of social value. By accelerating the transition of the storage to SSDs, SK hynix will contribute to the reduction of carbon dioxide emissions.”
In the fourth quarter, SK hynix expects seasonal increases in demand of the mobile and PC markets demand.
For DRAM, the chipmaker will focus on expanding the sales of 1Y-nanometer low power DDR5 DRAM, and also increase its presence in universal flash storage-based multichip package market, which combines DRAM with high-density NAND Flash.
For NAND, SK hynix will react to stable mobile demand in the market, while improving the profitability by expanding the sales proportion of 128-layer NAND Flash products.
By Song Su-hyun (firstname.lastname@example.org)
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